A comparison of the Vanguard VDHG ETF vs the BetaShares DHHF ETF on the ASX, two of the most popular multi-asset ETFs in Australia. We’ll look at their differences, pros, cons, how to start investing in them, and finally some alternatives that are worth considering! To settle the debate of which one is the ultimate all-in-one set and forget ETF.

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What are all-in-one multi-asset ETFs (Exchange Traded Funds)

Now you might be wondering, what is an all-in-one fund? Well, in essence, they’re essentially a “fund of funds” or an everything index. The difference between this and a regular ETF is that a standard ETF will be tracking a single index and investing directly into stocks to track this index. Whereas a multi-asset ETF doesn’t invest directly into stocks, instead it is investing in multiple ETFs or Funds (which themselves will hold stocks directly).

The seven underlying funds in VDHG are the Vanguard Australian Shares Index Fund (Wholesale), Vanguard International Shares Index Fund (Wholesale), Vanguard International Shares Index Fund (Hedged) - AUD Class (Wholesale), Vanguard Global Aggregate Bond Index Fund (Hedged), Vanguard International Small Companies Index Fund (Wholesale), Vanguard Emerging Markets Shares Index Fund (Wholesale), Vanguard Australian Fixed Interest Index Fund (Wholesale).

VDHG Asset Allocation
Across these seven funds there’s over 7,000 individual companies that you’re diversified across, and of course the 10% allocation to bonds. Whilst this seems pretty complicated, at a high level, you’re essentially getting exposure to, Australian large-caps, International large-caps, International small-caps, Emerging markets, and bonds. Or if you want it simplified even further. 36% Aussie equities, 54% Global equities and 10% Bonds. The only notable asset class missing is direct exposure to the property sector through something like their Vanguard Australian Property Fund.

There’s four underlying funds in DHHF and this time they are actually ETFs, with over 8,000 individual stock holdings between them. These ETFs are BetaShares Australia 200 ETF - A200, The Vanguard Total Stock Market ETF - VTI, The SPDR Portfolio Developed World ex-US ETF - SPDW, and The SPDR Portfolio Emerging Markets ETF - SPEM

A200 provides exposure to the largest 200 companies on the ASX and DHHF has a 37% allocation towards it. Given that the Australian market only accounts for roughly 2% of the world's global economy, this might seem like a bit of an overallocation. However, given that Aussie shareholders receive higher dividends than those offered by other markets, in addition to receiving tax benefits through the franking system. This often makes investing in the ASX an appealing prospect for Aussies.

VTI tracks the total US stock market and provides exposure to large, mid and low-cap companies in the US, with DHHF allocating 34.9% towards it. The US accounts for almost one-quarter of the world's global economy and has remained the largest economy since 1871.

SPDW provides exposure to developed markets outside of the US and DHHF has a 20.7% allocation in this category.

SPEM rounds out the funds in DHHF with a 7.4% allocation and is used to get exposure to emerging markets. The top-weighted countries in SPEM are China, Taiwan, India, Hong Kong and Brazil, since these economies are new and have a lower overall market cap, their growth potential is typically higher than in developed markets.


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